The End Times of Brick and Mortar

Last month, Ian remembered that he had $50 worth of gift cards for Toys R Us in the bottom drawer of his desk and that those cards had to be used quickly, because the company was going bankrupt. We hastily purchased some electronic items, but we were notified three weeks later that the order was cancelled without refunding the gift cards. The company ate our $50.

So, I’m currently trying to work through the phone tree at ToysRUs to get that money back. I know it’s a lost cause, but losing $50 is bugging the crap out of me. Even if all the good stuff is gone in the stores, I want to buy diapers or something and donate it to the local food pantry. The odds of getting this money back is very slim, but I have to give it a shot.

Toys R Us is yet another business that cannot compete with the convenience of online shopping. Our local mall is a ghost town and is mostly used by retirees who pace back and forth to get their steps on the Fitbits. Sears will soon be replaced by yet another fancy supermarket with lots of prepared foods.

Is the demise of ToysRUs and its fellows a bad thing? No more teenagers hanging out at the foodcourt at the mall. No more flat-iron salesmen at the kiosks chasing me down the hallway with their products. No more lines of kids waiting to get their pictures taken with the Easter bunny. Does it matter? Probably not.

I’m quite happily buying picture frames, rugs, and eyeglasses online. My rug showed up in two days and was perfect. My glasses were inexpensive and were easy to exchange when the first pair were too large. Framing my picture online saved me several separate trips to get the picture printed and then matched to the right frame. Over this winter, I also purchased my holiday cards and a stylist-approved outfit — all online.

The stores that are going to survive the continuing extinction of brick and mortar are going to be like creatures that survived the dinosaur extinction — smart and agile and small.

People still want to go out to be inspired. They want an experience along with their shopping. So, stores that show you what your rooms can look like with their products, an IKEA for example, will be fine. Stores that provide services for the busy family, like the prepared foods at the fancy supermarkets, will keep expanding. Stores that make you feel hipper with carefully curated items and hip workers will be okay.

But you should hurry up and spend your gift cards to stores with piles of dusty board games or piles of discount jewelry. Their days are numbered.

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26 thoughts on “The End Times of Brick and Mortar

  1. Not all malls are going down. I live about a mile from the King of Prussia mall, and they just did a huge expansion, adding more luxury stores like Hermes and a high-end food court. Shake shack and Real Food etc. Half a mile away from that mall they just created a huge completely new open- air mall, with a huge REI among many other things, though few people hike around here. It’s the winners doing better and better and the losers falling by the wayside, I think, just like with universities. Also utilitarian shopping is over but “shopping experiences” continue. (And my kids do still hang out at tge mall sometimes. They love Primark, where you can buy a three dollar t shirt or skirt. I give them 20$ to shop and they’re happy–cheaper than a movie!)

    1. My numbers seemed funny–like the kids were buying less than one-dollar t-shirts in 1980s money–so I double checked. I remember when movie tickets were four dollars, when I was in high school, now they are about three times as much ($13.50 at my local theater, for a regular screen). Primark has women’s t-shirts regular price for $5.50, though some are $7. So I guess it’s the equivalent of buying a t-shirt for $2, back when I was in high school? Or even less?

      Primark, by the way, is a Dublin-based “fast-fashion” store that is doing quite well despite overall trends:

      https://www.msn.com/en-us/money/companies/we-just-visited-this-discount-retailer-that-could-kill-sears-from-the-inside-out-and-were-blown-away/ss-AApDERP?ocid=spartandhp

  2. I agree with the other two commenters–the death of in-person shopping is greatly exaggerated. Certainly some businesses will succeed and others fail. I do think that the more personal the experience, the more likely it is to succeed.

    I think we will lose something if all or most brick-and-mortar disappears–we won’t see other people as much, and we won’t see other people who look and act differently than we do. I think online shopping–I do a fair amount–leads to more social isolation, and i think we suffer from enough of that already.

  3. We have an ailing traditional mall (they lost GAP!) and a large growing strip mall with a much better lineup of stores. I go to the big strip mall at least a couple times a week, usually with the 5-year-old. We are HUGE free-riders at Petco (which I tend to treat as a free, air-conditioned zoo), but good customers at Starbucks, World Market, Carter’s, Old Navy, GAP, etc., etc.

      1. B.I. said,

        “I just discovered World Market this Christmas. It’s like Costco meets Anthropologie, I was so excited.”

        Enjoy!

        I especially enjoy scavenging there after Christmas, when the fancy European Christmas sweets are marked down.

  4. Retail apocalypse is real on the Upper West Side. Lots of empty storefronts, which is strange considering the overall economy. It’s also a little strange that supermarkets seem to be having trouble, but fancy stores (Trader Joe’s, Whole Foods) are fine. Are people getting staples (e.g. toilet paper) online and then buying meats and produce at the fancy stores? I’m not quite sure what is going on. Also restaurants are doing fine, but that at least I understand.

    1. The Upper West Side is not necessarily representative of the rest of country. This is so obvious it should not have to be explained to you.

    2. y81 said,

      “Retail apocalypse is real on the Upper West Side. Lots of empty storefronts, which is strange considering the overall economy. It’s also a little strange that supermarkets seem to be having trouble, but fancy stores (Trader Joe’s, Whole Foods) are fine. Are people getting staples (e.g. toilet paper) online and then buying meats and produce at the fancy stores? I’m not quite sure what is going on. Also restaurants are doing fine, but that at least I understand.”

      When we lived in NW DC with no car, we used to get our basic groceries from Peapod and our diapers from Amazon. We’d do a monthly Costco trip for wipes and maybe diapers and fruit, but we only bought toiletries, some kid clothes, and some books in the neighborhood. We were easily at 80% online purchases then, maybe even more.

      It’s probably no more than 50/50 now in TX.

      1. I spend less for similar items at Trader Joe’s than at the local supermarkets. My theory is that the supermarket prices are jacked up by the use of slotting fees.

        My theory is that the supermarkets all have to play along. It seems like collusion to me. I can find government reports online, which seems to indicate others have investigated this over time: https://www.justice.gov/atr/economics-slotting-contracts.

        and https://en-law.tau.ac.il/sites/law-english.tau.ac.il/files/media_server/Law/faculty%20members/David%20Gilo/Gilo%20Yehezkel%20Vertical%20Collusion%20with%20Secret%20Contracts%2028%201%2016Lt.pdf

        We visited family in Europe a few years ago, and I was struck by how much LESS expensive it was in a developed European country than at home.

        Trader Joe’s does its own thing. I save a lot of money by shopping there. Then again, I’m generally not tied to specific brands of crackers, breads, etc., and cook most meals from scratch.

        I believe (if my theory is correct) that our local supermarkets are poised to be really harmed by the expansion of stores like Trader Joe’s and Aldi into their regions. In theory, the customers will flock to the stores with lower prices.

      2. Cranberry,

        “In theory, the customers will flock to the stores with lower prices.”

        Location is important, though.

        Theoretically, I could go to the Aldi’s 15 minutes away, but in practice, the mega-grocery 6 minutes away is much more appealing.

  5. I don’t go to stores much. Pretty much everything I need I already bought ten years ago and everything I want I’m not buying now because I’m nervous about what the political environment is going to do to the economy.

  6. We have a booming (at least to the casual observer) upscale, destination, uncovered mall. It has restaurants, higher end stores, a supermarket, a kumon tutoring center, a managed care health care office, a daycare (for profit, some tech employees get subsidized spots). I see it as a trend, but one that includes multiuse. People come for doctor’s appointments and then lunch or shopping (or come for tutoring, and head shopping during their kids’ sessions). Whether that model saves the Free People, J Crew, and Ann Taylor, I’m less sure about, and, I suspect as in the Toys R Us example, the specifics of the store and what they offer will matter.

    We also have a not obviously successful covered mall, that may yet turn things around — they hope with a light rail stop & developing the area as a work/live/shop location, even though it’s 10 miles from the center city. There has been condo/apartment/assisted living development in the area, and I think it is a possible model.

  7. Just offering a data point. King of Prussia and AmyP’s local mall are not necessarily representative of the nation either. Why the hostility?

    1. I believe that the VC larding with debt occurred at the big department stores, too. Can’t remember a cite, but remember the same story about them. I think though, one might argue that what those firms are doing is trying turn arounds that take stores that might be surviving in the middle and try to make them big enough to be winners. So, I see the effect as being part of the broader model of the winner-take-all economy.

      Maybe the other side is being small enough to survive, but I’m not certain about that model, either. And, even if it works, it puts a lot of risk on the individual set of people in the small success.

  8. Seconding what Nora said. TRU had a reasonably sound underlying business but got larded up with debt. Similar things happened to a lot of newspapers in the early 2000s. Online challenges are real and significant in both sectors, but financial shenanigans by ownership and/or senior management made a lot of individual businesses more vulnerable than they had to be. Needless to say, the financial engineers are not the ones who lost their careers.

    1. I used to be a research assistant for a business professor whose specialty was corporate failure in the mid 2000s who wrote a lot about how VC was ruining everything. Given this was before the economic collapse he was quite prescient, actually.

  9. Another theory is that managing a retail store is a distinct skill set. Wall Street has pressured chains to open more stores than they should have. Either they open stores in areas with no interest in their offerings (such as ski equipment in towns a long way from the mountains), or to open so many stores they couldn’t hire good managers to keep them running.

    Also, if you have the skills to be a good store manager, you have a wider range of choice in professions these days.

    Quite a few stores have closed near us, but most of them have been due to the owners retiring.

    There is a “loser mall” near us, but new malls are opening up or older malls are being refurbished. The malls that are doing well are well cared for. They are clean and kept up to date.

  10. Oh, you lucky city people and your malls. I’m an hour away from the nearest malls (one north of here and one south), one dying, one all-but-dead, without so much as a J.Jill. The best good mall is 1.5 hours, and I have to travel three hours to my parents’ to get to really great malls. Before I moved to Rural-ville, I was very mall-averse, but now I have a deep appreciation for them.

  11. I have a theory that “just in time” ruined the mall experience, at least for me. The mall stores seem to run on some sort of strange system that assumes people buy bathing suits before it gets warm, and winter coats before it gets cold. I wait until I actually need an item, but by that time, say, December, they’re clearing out the last of the winter coats to make way for the swimsuits.

    A slight exaggeration, but I have been unable to find mosquito repellent in summer, etc. (Store clerk: oh, we cleared that out last week.) Plus that weird year in which the fashion experts thought we’d all want to wear eggplant colored clothing in summer. Or the year in which everything was teal.

    So bizarrely, there are these huge places dedicated to shopping, but most of the goods are strange. I tend to do much better at places like TJ Maxx, which buys stuff from the department stores. So our clothing is always last season (or earlier), but what the heck, it’s a bathing suit in summer, rather than early spring.

    I don’t enjoy wasting time browsing for an item I need, on the off chance that this is the year the fashion experts allow us to have white shirts and sensible shoes, rather than florescent green and flip flops. Online I can find what I need.

    Once you know you can find what you need online, you’re not going to break down and buy that teal microwave with a special soup button, because it’s the only type that has been decreed to be in that year (or month, or week.)

    I do very well at our local outdoor stores, because they tend to stock practical clothing at reasonable prices (probably because they aren’t trying to fit us all into eggplant bikinis in February.)

    1. Yes, it’s frustrating if you need winter clothes in winter. OTOH, the prices can be good. One of my colleagues tore his winter coat last January, so badly that he needed to buy a new one. He had to go six stores, most of which were complete out of stock, but the coat at Nordstrom’s was 60% off.

    2. I also think that in the early/mid 2000s, stores that used to stock well-made moderately-priced basics decided en masse to sell poorly-made trendy clothing at a higher price point. The Gap and JCrew immediately spring to mind as selling pieces where quality (high) and style (classic) mostly justified their price to places where you can now troll the online clearance hoping to find something that might be worth buying. I’m not going to bother to make a trip to a brick and mortar store where I know there’s at best maybe 1% of the merchandise I’d ever consider wearing.

  12. cranberry said,

    “I have a theory that “just in time” ruined the mall experience, at least for me. The mall stores seem to run on some sort of strange system that assumes people buy bathing suits before it gets warm, and winter coats before it gets cold. I wait until I actually need an item, but by that time, say, December, they’re clearing out the last of the winter coats to make way for the swimsuits.”

    So true!

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